A seemingly good idea – paying workers extra money for risking their health during the pandemic – saw unintended consequences when grocery company Kroger opted to close two stores because it says the “hero pay” made those stores unsustainable.
A Long Beach, Calif., Ralph’s and a Food 4 Less were shutting down Saturday following the city’s mandate to pay $4 extra an hour during the coronavirus pandemic.
Santiago Vasquez, a Ralph’s part-time employee, told CBS LA that his coworkers were offered jobs, some in nearby stores.
“I was offered to stay with the company in Huntington Beach and Seal Beach,” he said, “…but I’d rather just (work) minimum wage around where I live.”
Late in 2020, the Long Beach City Council passed an ordinance that requires grocers with at least 300 employees nationwide to provide their employees with an extra $4 per hour in hazard pay for at least 120 days.
In February, Kroger announced those closures would be carried out because of the new law.
Kroger maintained the extra cost makes it impossible to operate “underperforming” stores.
“The mandate will add an additional $20 million in operating costs over the next 120 days, making it financially unsustainable to continue operating the three underperforming locations,” Kroger said in a statement.
“Despite our efforts to overcome the challenges we were already facing at these locations, the extra pay mandate makes it impossible to run a financially sustainable business.”
Kroger plans to close another three stores in the city of Los Angeles, which passed its own $5 per hour hero pay mandate last month.
Some have questioned Kroger’s “underperforming” logic.
Long Beach Mayor Robert Garcia cited a report by The Brookings Institute that noted Kroger had doubled its profits and spent “nearly a billion dollars in 2020 to buy back its own stock shares.”